| Mon 10 Sep 2007, 7:01 | | AEG - Aveng - A R3 5 billion voluntary offer from |
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AEG
AEG
AEG - Aveng - A R3,5 billion voluntary offer from RMB followed by a specific
repurchase of shares
THE AVENG GROUP
AVENG LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1944/018119/06)
ISIN: ZAE000018081
SHARE CODE: AEG
("Aveng" or "the Company")
ANNOUNCEMENT OF A R3,5 BILLION VOLUNTARY OFFER FROM RAND MERCHANT BANK TO
SHAREHOLDERS FOLLOWED BY A SPECIFIC REPURCHASE OF SHARES BY AVENG
1. INTRODUCTION
In May 2007, Aveng disposed of its 45,65% shareholding in Altur Investments
(Proprietary) Limited ("Altur Investments"), which represented its 45,65%
indirect interest in Holcim South Africa (Proprietary) Limited ("Holcim South
Africa"), for a cash consideration of R6,8 billion. In the circular to
shareholders, dated 11 May 2007, the board of Aveng ("the board") indicated that
it anticipated that at least 50% of the cash proceeds of the disposal would be
returned to shareholders.
The aggregate amount of capital to be returned to shareholders is a function of
the current organic and acquisitive growth prospects as well as the balance
sheet capacity of Aveng. Given the current buoyancy of the markets in which
Aveng operates, a number of such growth prospects are currently under evaluation
and, to the extent that these prospects progress beyond the current assessment
stage, the board will inform shareholders.
The board is however confident that, irrespective of the outcome of the
aforementioned prospects, R3,5 billion of capital can be returned to
shareholders in the short term and, should the assessment of current prospects
not result in significant incremental capital requirements, it is anticipated
that as much as R5,0 billion of capital would, in aggregate, be returned to
shareholders.
After careful consideration of the various alternatives available to Aveng to
return capital to shareholders and being cognisant of the prospects as set out
above, the board proposes to return capital of R3,5 billion to shareholders via
the following mechanism:
- a voluntary offer ("the RMB offer") will be made by Rand Merchant Bank, a
division of FirstRand Bank Limited ("RMB") to Aveng shareholders for RMB to
acquire shares up to a maximum value of R3,5 billion at a price as detailed in
2.3 below; and
- Aveng will then purchase all the shares that RMB has acquired in terms of the
RMB offer from RMB ("the repurchase") for a repurchase consideration per share
equal to the RMB offer consideration as calculated in terms of 2.3 below.
A circular which contains details of the RMB offer and the repurchase will be
dispatched to shareholders on or about Monday 17 September 2007 ("the
circular").
This mechanism achieves the following two key objectives:
- shareholders who are looking at rebalancing their portfolio subsequent to the
disposal of Aveng`s indirect interest in Holcim South Africa, would be able to
do so by tendering their shares to RMB in terms of the RMB offer. On the other
hand, shareholders that consider themselves to be long-term shareholders in
Aveng who do not wish to sell their Aveng shares would not be required to do so
in terms of this voluntary offer; and
- the RMB offer provides an efficient mechanism through which shareholders can
dispose of all or part of their shareholding in Aveng. The RMB offer
consideration payable in terms of the RMB offer, which will (subject to the
overall purchase consideration limit of R3,5 billion) be settled on a daily
basis, will provide shareholders more certainty on the extent of the acceptance
of their tender of shares in terms of the RMB offer than would be possible under
a pro-rata voluntary tender offer by Aveng. A pro-rata voluntary tender offer by
Aveng would apportion the repurchase between shareholders at the end of the 3-
week offer period, thereby resulting in uncertainty regarding the eventual
outcome of the shareholders` tenders. The RMB offer, which operates on a "first
come, first served" basis, will provide shareholders certainty on the extent of
the acceptance of their tender on a day-to-day basis.
It should be noted that, being a voluntary offer which does not compel
shareholders to sell any portion of their shares, the RMB offer may not result
in the maximum amount of R3,5 billion being returned to shareholders and, should
less than the maximum number of shares be acquired by Aveng in terms of the
repurchase and once the evaluation of the aforementioned growth opportunities
has been finalised, the board will propose a further capital return programme to
ensure that the optimal level of capital (but no less than R3,5 billion) will
have been returned to shareholders. It is anticipated that, if necessary, such a
proposal will be made prior to the end of the 2007 calendar year.
The purpose of this announcement is to provide shareholders with details of the
RMB offer and the repurchase. Approval will be sought from shareholders for the
return of approximately R3,5 billion of capital to shareholders at the general
meeting to be held on Thursday 11 October 2007.
2. THE RMB OFFER
RMB will make an offer to all shareholders to purchase that number of shares
which, based on the RMB offer price as referred to in 2.3, will result in a
maximum RMB offer consideration of R3,5 billion in the aggregate on a "first
come, first served" basis on the terms and subject to the conditions set out
below:
2.1 Terms of the RMB offer
2.1.1 Subject to the fulfilment of the conditions precedent set out in paragraph
2.2 below, RMB will purchase from shareholders, on a "first come, first served"
basis, at a price per share to be determined in accordance with the provisions
set out in 2.3 below, the shares tendered in terms of the RMB offer up to a
maximum aggregate consideration of R3,5 billion.
2.1.2 The RMB offer will be conducted on a "first come, first served" basis and
on the basis that all shareholders who accept the offer on a given day will be
treated equally. RMB will, after the close of trading on each day after the RMB
offer opens, purchase all shares tendered to it by shareholders on that day,
unless the value of the shares tendered during the day, when aggregated with the
value of shares already so purchased by RMB pursuant to the RMB offer, exceeds
the aggregate consideration of R3,5 billion. In such event, RMB will purchase a
percentage of total shares tendered on that day such that the total amount paid
to shareholders under the RMB offer is R3,5 billion in aggregate and the RMB
offer will be deemed to have closed on that day.
2.1.3 Payment of the RMB offer consideration for all shares sold pursuant to the
RMB offer will be settled within 5 business days of RMB purchasing such shares,
in accordance with the provisions of the RMB offer and as per normal Strate
settlement rules.
2.1.4 Shareholders will be advised daily via SENS announcements of the level of
acceptances of the RMB offer and the cumulative number of shares sold to RMB
pursuant thereto.
2.1.5 It should be noted that shareholders who hold Aveng shares prior to the
opening of the RMB offer will be entitled to the 2007 final dividend and as such
the RMB offer price should be viewed as an `ex dividend` purchase consideration.
2.2 Conditions precedent
2.2.1 The opening of the RMB offer and, accordingly, the purchase and sale of
any shares to RMB pursuant thereto, is subject to the following conditions
precedent:
2.2.1.1 the special resolution approving the repurchase as a specific approval,
in terms of section 85 of the Companies Act being passed by the requisite
majority at the general meeting to be held on Thursday 11 October 2007 and such
special resolution being registered by the Registrar of Companies on or before
Friday 12 October 2007 (or such later date as RMB and Aveng may agree in
writing);
2.2.1.2 the volume weighted average market price of Aveng shares on the JSE
Limited ("JSE") on Wednesday 10 October 2007, being the trading day immediately
prior to the Aveng shareholders` meeting, not being lower than 85% of the RMB
offer consideration; and
2.2.1.3 Aveng depositing funds with RMB amounting to R3,5 billion by no later
than Monday 17 September 2007, which amount will be ceded by Aveng to RMB as
surety for Aveng`s obligations in terms of the repurchase agreement.
2.2.2 Should any of the conditions precedent referred to in 2.2.1 above not have
been timeously satisfied or waived in writing by Aveng or RMB as relevant, the
RMB offer shall ipso facto lapse and be of no force or effect.
2.3 The RMB offer consideration
2.3.1 The RMB offer consideration comprises a cash consideration per Aveng share
equal to the lower of:
i. the volume weighted average price per share on the JSE Limited ("JSE") for
the week commencing on Monday 10 September 2007 and ending Friday 14 September
2007 (both days inclusive) less the dividend of 85 cents per share declared by
Aveng for the year ended 30 June 2007 to which shareholders will be entitled on
12 October 2007; or
ii. a 5% premium to the average daily closing price of a share on the JSE from
Monday 3 September 2007 to Friday 7 September 2007 (both days inclusive).
("RMB offer consideration")
Aveng will publish the amount of the RMB offer consideration, determined as set
out above, together with the financial effects based on that price on SENS, on
Monday 17 September 2007 and in the press on Tuesday 18 September 2007.
Shareholders will be entitled to tender anything up to 100% of their Aveng
shareholding to RMB. The RMB offer will be conducted on a "first come, first
served" basis;
2.3.2 RMB will, through the transfer secretaries, administer and effect
settlement of the RMB offer consideration to shareholders accepting the RMB
offer.
2.4 The RMB offer period
Subject to the conditions set out in 2.2.1 above being satisfied or waived in
writing by Aveng or RMB as relevant, the RMB offer will open for acceptances
from 10:00 on Monday 15 October 2007 and is expected to close at 12:00 on Friday
2 November 2007. Any amendments to the opening and closing dates or times of the
RMB offer will be released on SENS and published in the South African press.
2.5 Funding of the RMB offer
The RMB offer consideration will be funded out of cash and liquid assets of RMB.
3. THE REPURCHASE
3.1 Authority to repurchase shares
A general meeting of Aveng will be convened to be held at 10:00 on Thursday 11
October 2007 at Block B, 204 Rivonia Road, Morningside, Sandton at which meeting
the resolutions authorising the repurchase as a specific repurchase will be
proposed for consideration.
3.2 Terms of the repurchase and the repurchase consideration
Aveng will, subject to obtaining the requisite shareholder approval, repurchase,
on the day after the closing of the RMB offer from RMB all the shares acquired
by RMB in terms of the RMB offer at a price per share equal to the RMB offer
consideration, being the price at which RMB acquired those shares in terms of
the RMB offer ("the repurchase consideration").
3.3 Pro forma financial effects of the repurchase
The table below, which also includes the financial effects of Aveng`s disposal
of its indirect interest in Holcim South Africa sets out the unaudited pro forma
financial effects of the repurchase on basic earnings per share ("EPS"), diluted
basic EPS, headline EPS, diluted headline EPS, net asset value per share and net
tangible asset value per share, based on the audited results of Aveng for the
year ended 30 June 2007.
The unaudited pro forma financial effects are the responsibility of the Aveng
directors and have been prepared for illustrative purposes only to provide
information about how the repurchase may impact shareholders on the relevant
reporting date. Due to their nature, the unaudited pro forma financial effects
may not be a fair reflection of Aveng`s financial position, changes in equity,
results of operations or cashflows after implementation of the repurchase or of
Aveng`s future earnings:
Change
Before the due to After the
disposal(1) disposal disposal(2)
Earnings per
share (cents) 1 922.5 101,9 2 024,4
Headline earnings
per share (cents) 343,5 (4,7) 338,8
Fully diluted earnings
per share (cents) 1 567,4 82,5 1 649,9
Fully diluted
headline earnings
per share (cents) 289,6 (3,8) 285,8
Net asset value
per share (cents) 2 772,5 - 2 772,5
Net tangible asset
value per share (cents) 2 575,6 - 2 575,6
Number of shares
in issue (millions) 396,1 - 396,1
Weighted average
number of shares
in issue (millions) 389,2 - 389,2
Diluted weighted
average number
of shares in
issue (millions) 481,0 - 481,0
Change
% due to After the %
Change repurchase repurchase(3) Change
Earnings per
share (cents) 5% 373,9 2 398,3 18%
Headline
earnings
per share (1%) 4,2 343,0 1%
(cents)
Fully diluted
earnings
per share 5% 226,69 1 876,5 14%
(cents)
Fully diluted
headline
earnings
per share (1%) (5,7) 280,1 (2%)
(cents)
Net asset value
per share 0% (425,0) 2 347,5 (15%)
(cents)
Net tangible
asset
value per share 0% (467,2) 2 108,4 (18%)
(cents)
Number of
shares
in issue (70,0) 326,1
(millions)
Weighted
average
number of
shares
in issue (70,0) 319,2
(millions)
Diluted
weighted
average number
of shares in
issue (70,0) 411,0
(millions)
Notes:
1. The figures in the column "Before the disposal" have been extracted from
Aveng`s audited results for the year ended 30 June 2007, which were released on
SENS on Monday 10 September 2007 and will be published in the press on Tuesday
11 September 2007.
2. The "After the disposal" column illustrates the impact of the Holcim disposal
on the 2007 full year results and was calculated on the following basis:
- the 45,65% shareholding in Altur Investments was sold with effect from 1 July
2006;
- the cash proceeds from the disposal were received on 1 July 2006;
- interest was earned on the net cash proceeds received at an after tax rate of
6,4% per annum for the period 1 July 2006 to 30 June 2007;
- the profit on disposal of the sale shares of R6,451 billion (calculated based
on the carrying value of Altur Investments at 30 June 2007 and after deducting
transaction costs) has been excluded in the calculation of headline earnings per
share and fully diluted headline earnings per share. For the purposes of this
calculation:
- the carrying value of the investment as at the date of sale of Altur
Investments was R322 million;
- the equity accounted earnings that would have been accounted for the period
until the disposal in May 2007 would have been R415 million; and
- the total cash disposal proceeds amount to R6,773 billion.
3. The "After the repurchase" column is calculated on the following basis:
- the repurchase consideration is R3,5 billion in aggregate;
- the repurchase consideration was paid on 1 July 2006;
- an illustrative repurchase consideration of R50,00 per share The actual price
for the RMB offer and repurchase will be released on SENS on Monday 17 September
2007, determined in accordance with 2.3 above;
- the number of shares in issue reduces by 70,0 million as a result of the
repurchase at the illustrative price of R50,00 per share;
- the interest assumed to be earned on the net cash proceeds received (at an
after tax rate of 6,4% per annum) for the period 1 July 2006 to 30 June 2007 was
reduced to account for the R3,5 billion that is assumed to be paid on 1 July
2006; and
- No STC was incurred due to STC credit on Altur Investments disposal.
3.4 Funding of the repurchase
The repurchase consideration will be funded out of cash and liquid assets of
Aveng.
3.5 Adequacy of working capital
The board is of the opinion that, after considering the effect of the
repurchase:
3.5.1 Aveng and the Aveng Group will be able to pay their debts as they become
due in the ordinary course of business for a period of 12 months after the date
of approval of the circular by the JSE;
3.5.2 the assets of Aveng and the Aveng Group will be in excess of the
liabilities of Aveng and the Aveng Group for a period of 12 months after the
date of approval of the circular by the JSE;
3.5.3 the share capital and the reserves of Aveng and the Aveng Group will be
adequate for ordinary business purposes for a period of 12 months after the date
of approval of the circular by the JSE; and
3.5.4 the working capital of Aveng and the Aveng Group will be adequate for
ordinary business purposes for a period of 12 months after the date of approval
of the circular by the JSE.
4. JSE LISTING
The JSE listing of all those shares that will be repurchased by Aveng from RMB
will be subsequently terminated and the shares so acquired cancelled by Aveng.
5. FURTHER ANNOUNCEMENT
A further announcement detailing the RMB offer consideration as determined in
accordance with 2.3 above, the salient dates and times and the financial effects
of the RMB offer and the repurchase will be released on SENS on Monday 17
September 2007.
Sandton
10 September 2007
Merchant bank and transaction sponsor
Rand Merchant Bank
Independent sponsor
JP Morgan
Reporting accountants and auditors
Ernst & Young Inc.
Corporate law advisers to Aveng
TABACKS
Legal advisers to RMB
Werksmans Inc.
Date: 10/09/2007 07:01:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
